Quebec still incentive leader

After the Quebec election in early June, Jean Charest’s newly elected Liberal government said its 2003-2004 budget would pare back tax credits and tax holidays for businesses. Despite the cuts, Quebec will continue, for at least another year, to be the most favourable mining jurisdiction in Canada in terms of tax incentives for raising capital and encouraging mineral exploration.

The maximum additional deduction available for surface mineral exploration expenses incurred in Quebec has already been reduced to 31.25% from 75%, and for underground mineral exploration, the additional deduction has been reduced to 10.42% from 25%.

“I don’t think anyone expected the status quo could be maintained,” says Robert Whittall, chairman of the taxation and finance committee of the Prospectors & Developers Association of Canada. “The cuts to the former Parti Qubcois government’s interventionist programs are, in many respects, quite prudent given the state of the Quebec treasury. Such measures as the fifteen per cent allowance for financing costs and the adjusted cost base for flow-through shares will certainly be missed but will bring the province more in line with other provinces.”

Whittall adds: “While significantly reduced, these programs are still very supportive of mine exploration.”

Flow-through-share financings, enhanced by tax credits, have resulted in important discoveries in Quebec. Since October 2000, discoveries have been made by Ashton in the Otish Mountains, Canadian Royalties in Ungava, and Agnico-Eagle on the Lapa property, near Val d’Or.

“Quebec is the only province in Canada to meet its annual geoscience funding commitments under the National Co-operative Mapping Strategies program,” says David Comba, the PDAC’s director of issues management, “and flow-through has enabled exploration companies to follow up on the opportunities created by these types of programs.”

— The preceding is from an information bulletin published by the Prospectors & Developers Association of Canada.